Is It Legal For Restaurants to Not Accept Cash?

I’ve noticed a lot of restaurants popping up with a peculiar sign in their window: Cashless. Yes, these restaurants will not take cash!. They only accept credit cards. Yet, right on your money, it says “legal tender for all debts private and public.” Are these cashless restaurants legal?

First, though, why in the world would a restaurant not want to take cash?

One of the main reasons a restaurant may refuse to accept cash is convenience and safety. No money on the premises means there is no reason to rob the establishment for cash. And, no cash means no dangerous trips to the bank for those businesses that cannot employ armored car services. I know whereof I speak. I have been in a position where I had to carry large sums of cash for morning banks deposits for the retail business I managed. We always traveled in pairs, but even so, were extremely vulnerable. Anyone paying attention could have figured out our schedule and robbed us at gunpoint.

Just such a scenario happened to the owner of a local restaurant I had been to a few times. The owner, who was using the alley behind the restaurant to take a deposit to his car, was robbed, shot, and killed.

The other reason a restaurant may decide to go cashless is that a credit card company gave them incentives to do so. For example, Visa had begun offering small business, including some restaurants, up to 10,000 dollars in technology, marketing expenses, etc. if the restaurant will stop taking cash.

Refusing Cash Can’t Be Legal, Can It?

That was my reaction! This can’t be legal. They have to take my cash! — not that I ever use cash. But a few minutes of research turned up a surprising fact: On the federal level, it is perfectly legal. There is no law which says that business must accept cash money. Here is what the United States Treasury has to say about it:

“I thought that United States currency was legal tender for all debts. Some businesses or governmental agencies say that they will only accept checks, money orders or credit cards as payment, and others will only accept currency notes in denominations of $20 or smaller. Isn’t this illegal?”

The pertinent portion of law that applies to your question is the Coinage Act of 1965, specifically Section 31 U.S.C. 5103, entitled “Legal tender,” which states: “United States coins and currency (including Federal reserve notes and circulating notes of Federal reserve banks and national banks) are legal tender for all debts, public charges, taxes, and dues.”

This statute means that all United States money as identified above are a valid and legal offer of payment for debts when tendered to a creditor. There is, however, no Federal statute mandating that a private business, a person or an organization must accept currency or coins as for payment for goods and/or services. Private businesses are free to develop their own policies on whether or not to accept cash unless there is a State law which says otherwise. For example, a bus line may prohibit payment of fares in pennies or dollar bills. In addition, movie theaters, convenience stores, and gas stations may refuse to accept large denomination currency (usually notes above $20) as a matter of policy.

So, what about the States? Maybe the states require businesses to take cash. Well, I’ve searched and searched, but I can only find reference to one stat that has passed a law requiring all business to accept cash as a form of payment: Massachusetts. According to the language of their law, retail establishments offering goods or services for sale must accept cash or “legal tender” for payment. It would seem that a restaurant is such an establishment, but this is not clear.

What this basically means is that over most of the United States, businesses can decide to not accept cash and only accept credit cards or checks. Most likely, of course, they would decide to only accept credit or debit cards.

Look at the language the Treasury Department uses again, above. Notice the part that says “all United States money as identified above are a valid and legal offer of payment for debts when tendered to a creditor.” Cash must be accepted as payment for debts. It does not have to be accepted for payment for goods or services rendered. A “debt” is money that is owed or due for payment. Cash on the barrelhead, so to speak, is not payment of a debt, but is payment for goods or services.